After Rahul Gandhi alleges stock market scam, Sensex erases election result day loss

As Narendra was elected as the leader of Lok Sabha today with support from allies TDP and JD(U) to form the next government, Sensex rallied over 1,500 points intra-day.

After ending Tuesday's session with a crash of near 6%, Sensex made up for more than half of the loss the next day. In the last 3 days, the index is up around 4,500 points with investors looking beyond the fact that 'Modi ki Guarantee' failed to earn the BJP a simple majority in the Lok Sabha.

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Earlier during the election campaign season, both PM Modi and Home Minister Amit Shah had said the market will go up after results are out.

“You will see that in one week within June 4, the day election results would be declared, market participants would get tired,” PM Modi had said in an interview to NDTV last month while hinting that the market will hit fresh record highs.

This became a political controversy with Rahul Gandhi questioning why both PM Modi and Amit Shah had given "investment advice" and predicted major stock market rally on election result day.

"For the first time, we noted that during elections, the Prime Minister and the Union home minister commented on the stock market. The PM said that the stock market is rising at a great speed. The home minister said that on June 4 the stock market will be on the rise and you all should invest. A similar thing was said by the finance minister... Amit Shah said buy shares before June 4; on May 19, PM Modi said the stock market will break records on June 4," Gandhi told a press conference last evening.

Calling it a "Rs 30 lakh crore stock market scam", he even demanded a JPC probe.

Trinamool Congress' Rajya Sabha MP Saket Gokhale had also asked Sebi to investigate whether BJP and exit poll agencies made crores by manipulating the stock markets via pollsters.

Back on Dalal Street, investors are worried over whether a pro-reform Modi will be able to carry out his growth agenda with coalition partners as effectively in the past.

India bull Chris Wood of Jefferies said the election result has probably reduced the prospects of reforms in PSUs and public sector divestment.

However, foreign investors say they view any significant correction as an opportunity to add.

"We are certainly not at the end of the bull run. If a country is growing at 7%, like India is now growing, the market and earnings of good companies will go up double that, 14-15%. So you can expect the market index to be rising at that pace over the next 10 years," Mark Mobius said.

(Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)